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3 Jul 2014
ECB to stay put today – Danske Bank
FXStreet (Edinburgh) - Anders Fischer, Analyst at Danske Bank, expects the ECB to keep the tone unchanged from the last meeting.
Key Quotes
“The ECB took a significant easing step in June and the meeting on Thursday is likely to provide much less new information”.
“We believe focus will be on some of the unanswered questions about the announced easing measures, in particular about the TLTROs, and on whether the ECB could be more specific about what it means when it says it has decided to ‘intensify preparatory work related to the outright purchases in the ABS market.”
“Despite a lot of questions, we do not think the ECB is ready with further details about its measures or its considerations related to ABS purchases”.
“An important argument for the ECB to continue its work with the details about the TLTROs and an ABS programme is that it will have more information about banks’ balances at the end of July as it appears that the Asset Quality Review will have been completed (although it will not be disclosed until late October)”.
“We also believe the ECB will be met with questions about a broad-based QE programme, but Draghi will continue to focus on the latest measures”.
“Journalists are likely to argue that it might be necessary with such a programme, as the ECB was surprised by the decline in inflation to 0.5% in May and the flash estimate for June showed that inflation remained unchanged at this cycle’s low”.
“Nevertheless, Mario Draghi has said that it will probably take three to four quarters before the effects on the real economy are seen and instead of using much time to discuss a QE programme, we expect him to repeat that ‘at the moment, however, we are focusing on the measures announced on 5 June’”.
Key Quotes
“The ECB took a significant easing step in June and the meeting on Thursday is likely to provide much less new information”.
“We believe focus will be on some of the unanswered questions about the announced easing measures, in particular about the TLTROs, and on whether the ECB could be more specific about what it means when it says it has decided to ‘intensify preparatory work related to the outright purchases in the ABS market.”
“Despite a lot of questions, we do not think the ECB is ready with further details about its measures or its considerations related to ABS purchases”.
“An important argument for the ECB to continue its work with the details about the TLTROs and an ABS programme is that it will have more information about banks’ balances at the end of July as it appears that the Asset Quality Review will have been completed (although it will not be disclosed until late October)”.
“We also believe the ECB will be met with questions about a broad-based QE programme, but Draghi will continue to focus on the latest measures”.
“Journalists are likely to argue that it might be necessary with such a programme, as the ECB was surprised by the decline in inflation to 0.5% in May and the flash estimate for June showed that inflation remained unchanged at this cycle’s low”.
“Nevertheless, Mario Draghi has said that it will probably take three to four quarters before the effects on the real economy are seen and instead of using much time to discuss a QE programme, we expect him to repeat that ‘at the moment, however, we are focusing on the measures announced on 5 June’”.